GST on Shops

[Gagan Bansal]

If someone unregistered in GST purchases land and after demarking as 80 commercial shops, sales 45 shops without construction as land for shop and 35 shops after built up. Each shop is valued more than 75 lacs. Being commercial shops, is he liable to registered in GST?
Is sale value of unconstructed/ not built up shops also to be considered for valuation & gst liability or only of constructed shops ?

Here completion certificate is not being provided by any authority. Which any other documents can be treated as completion certificate ?

[KASTURI SETHI]

(i) Semi-constructed/incomplete construction of the shop/building etc. is taxable.

(ii) The proof of first occupation is considered as completion certificate.

[Shilpi Jain]

Sale of land for shop - not liable to GST.

However if subsequently on sale of land the said person has done the construction then liability of GST will arise.

Some more details required. Whether the plan for the shop was applied for approval to the local authorities? Were the shops sold after the entire construction was completed?

Also are these shops in one locality having common facilities?

In cases where there is legally no requirement to issue CC, the certificate issued by chartered engineer, etc. as mentioned in entry 5b would be relevant

........under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of thefollowing, namely:-(i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; (20 of 1972.) or(ii) a chartered engineer registered with the Institution of Engineers (India); or(iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority;

[Gagan Bansal]

The land was purchased and after payment of development charges to the municipal committee, the shops were marked as per map prepared for self use. No plan for the shop was applied for approval to the local authorities.

35 shops out of 80 were sold after the entire construction was completed?

All these shops are in one locality having some common facilities?

As there is no legal requirement to take CC, so the certificate issued by chartered engineer, etc.was also not taken.

[Amit Agrawal]

Broadly I agree with Ms. Shilpi Jain Mam!

But, context of query and factual aspects are still not clear. For example: meaning of 'sales 45 shops without construction as land for shop'?

[Padmanathan KV]

The below views are only my opinion. Expert may please correct me if I am wrong. At the outset, when alleging that an activity is taxable supply, the onus is on the department to prove the same.

now, regarding the query,

1. there will not be any GST on sale of land for 45 shops as it is covered under Schedule III.

2. Regarding the sale of 35 shops, following provision is relevant:

Schedule II to CGST Act, 2017:

5. Supply of services

The following shall be treated as supply of services, namely:-

(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.

Explanation.-For the purposes of this clause-

(1) the expression "competent authority" means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:-

(i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; (20 of 1972.) or

(ii) a chartered engineer registered with the Institution of Engineers (India); or

(iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority;

(2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure;

Thus, if there is no requirement for obtaining completion certificate from competent authority, then certificate from architect/ chartered engineer/ licensed surveyor was required to be obtained. However, in your case you have not obtained the same. Therefore, the department may take a stand that the activity is covered under schedule II and not schedule III and hence taxable, unless you are able to prove that the entire consideration was received after first occupation.

One more aspect to be examined is whether it will be sufficient to obtain a certificate from architect/ chartered engineer/ licensed surveyor stating that construction was completed at a date which is before the consideration was received.

[Shilpi Jain]

As Amitji has stated, more clarity on facts required along with review of the documentation to properly advice on this matter. Implication could be big

AI Summary

Debate on GST liability for selling 80 shops: Experts question tax on unconstructed sales and completion certificate necessity. A discussion on the Goods and Services Tax (GST) liability for selling commercial shops arose, focusing on whether GST applies to sales of both constructed and unconstructed shops. An individual sold 45 unconstructed shops and 35 constructed shops, each valued over 75 lakhs, without obtaining a completion certificate. Experts debated whether GST applies to unconstructed land sales and the necessity of a completion certificate from authorities or a chartered engineer. Some argued that selling unconstructed land is not liable for GST, while constructed sales may be, depending on the completion certificate's status and payment timing.